GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG

GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
Water Availability and Business Risks



                                             Global Shale Gas Development: Water Availability and Business Risks   i
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
Design and layout by:
Nick Price
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
v     Foreword

1     Executive Summary
6     Key Findings
8     Recommendations

11    Introduction

17    Shale Resources and Water
18    Extraction of Shale Resources
19    Water Requirements
20    Freshwater Availability Risks

25	Assessing Fresh Water Availability and
    Business Risk
26 Methodology
27 Geo-Database of Shale Basins and Plays
27	Water Availability and Business Risk Indicators

31	Global Results
34 Key Findings
36 Country Comparisons

41    Conclusions and Recommendations
42    Conclusions
42    Recommendations

46    Appendix A: Country Analyses

74    Definitions

75    Endnotes
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
For many nations around the world, shale gas            This report draws on WRI’s Aqueduct Water Risk
represents an opportunity to strengthen energy          Atlas to identify the key locations, globally and with a
security while cutting emissions. In fact, shale gas    special focus on 11 countries, where shale gas and tight
adds 47 percent to the world’s natural gas reserves.    oil extraction might face the greatest water challenges.
But as governments and businesses explore this          In these areas government policies will be needed to
new and abundant resource, freshwater availability      guarantee water security, protect the environment,
is a key challenge they must address. In this study     and avoid business risks, if shale energy is developed.
WRI provides unprecedented global information on
freshwater availability for governments and busi-       With interest in shale gas growing, the time is ripe
nesses considering shale development.                   to understand its constraints. This report will be an
                                                        invaluable resource to businesses, policymakers,
Extracting oil or natural gas from shale poses a        and civil society in ensuring water for people and
number of risks to the environment and requires         the planet.
large quantities of nearby water. Much of this water
is needed for fracturing the shale to allow hydrocar-
bons to flow to the surface. Yet shale resources are
not always located where water is abundant. Our
analysis shows that China, India, South Africa, and
Mexico, for example, have large quantities of shale
gas but limited supplies of freshwater. It also shows
that roughly 38 percent of the area where shale
resources are located is arid or under significant
water stress; plus, 386 million people live above
these areas. These factors pose significant social,
                                                        Andrew Steer
environmental, and financial challenges to access-
ing water and could limit shale development.
                                                        World Resources Institute

With growing energy demands and attractive finan-
cial and employment opportunities for hydrocarbon
development, how can regulators and companies
determine if enough freshwater exists in a given
area to extract natural gas and oil from shale while
not degrading the environment?

                                                        Global Shale Gas Development: Water Availability and Business Risks   v
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
Limited availability of freshwater could become a stumbling block for
rapid development of shale resources through hydraulic fracturing.
Using information from the Aqueduct Water Risk Atlas, WRI provides
the first global and country-specific resource to help stakeholders
evaluate freshwater availability across shale plays worldwide.

                                   Global Shale Gas Development: Water Availability and Business Risks   1
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
Innovation in hydraulic fracturing and horizontal       the first publicly available, global and country-spe-
       drilling techniques is driving the rapid development    cific analysis to help evaluate freshwater availability
       of shale resources (which include shale gas, natural    across shale resources worldwide. Using geospatial
       gas liquids, and tight oil) across the United States    analysis to combine indicators from WRI’s Aque-
       and Canada.1 Already, known shale deposits world-       duct Water Risk Atlas and other sources (Table
       wide have significantly increased the volume of the     ES1) with the locations of shale resources globally
       world’s natural gas and oil resources. Governments      from West Virginia University and the National
       from Argentina and the United Kingdom, to Mexico        Energy Technology Laboratory, the report:

       and China, have started to explore the commercial
       viability of their shale reserves.                           Identifies locations most in need of govern-
                                                                    ment oversight and robust corporate policies to
       The potential for expansion is huge: known shale             properly manage freshwater availability in the
       gas deposits worldwide add 47 percent to the global          context of shale development; and
       technically recoverable natural gas resources, and
       underground stores of tight oil add 11 percent to the
       world’s technically recoverable oil.
                                                               ▪▪   Informs companies of potential business risks
                                                                    associated with freshwater availability, and
                                                                    builds the case for corporate water stewardship
       But as countries escalate their shale exploration,           and early source water assessment.
       limited availability of freshwater could become
       a stumbling block. Extracting shale resources           In addition to examining water availability and shale
       requires large amounts of water for drilling and        resource development from a global perspective (Fig-
       hydraulic fracturing. In most cases, these demands      ure ES1), this report analyzes for the first time water
       are met by freshwater, making companies develop-        availability in each shale play (prospective areas
       ing shale significant users and managers of water at    within the shale formation where gas and oil could
       local and regional levels, often in competition with    be commercially extracted) for 11 countries: Algeria,
       farms, households, and other industries.                Argentina, Australia, Canada, China, Mexico, Poland,
                                                               Saudi Arabia, South Africa, the United Kingdom,
       Although experts agree that critical environmental      and the United States. WRI selected these countries
       risks and impacts are associated with developing        based on the size of their technically recoverable
       shale, the risks and impacts specific to surface and    shale resources (as estimated by the U.S. Energy
       groundwater availability have been thinly docu-         Information Administration), current exploratory
       mented. With Global Shale Gas Development:              and production activity, likelihood of future develop-
       Water Availability and Business Risks, the World        ment, and feedback from industry, academia, and
       Resources Institute (WRI) fills this gap, providing     nongovernmental organization (NGO) experts.

GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
Table ES1 |   Indicators Selected to Evaluate Freshwater Availability and Associated Business Risks

  INDICATOR                   DEFINITION

  Baseline water stress       The ratio of total water withdrawals from municipal, industrial, and agricultural users relative to the
                              available renewable surface water. Higher values may indicate more competition among users and
                              greater depletion of water resources.

  Seasonal variability        The variation in water supply between months of the year. Higher values indicate more variation in water
                              supply within a given year, leading to situations of temporary depletion or excess of water.

  Drought severity            The average length of droughts multiplied by the dryness of the droughts from 1901 to 2008. Higher
                              values indicate areas subject to periods of more severe drought.

  Groundwater stress          The ratio of groundwater withdrawal to its recharge rate over a given aquifer. Values above one indicate
                              where unsustainable groundwater consumption could impact groundwater availability and groundwater-
                              dependent ecosystems.

  Dominant water user         The sector (agricultural, municipal, or industrial) with the largest annual water withdrawals.

  Population density          The average number of people per square kilometer.

  Reserve depth interval      The range of depths of the prospective shale area. Deeper formations generally require more water for drilling.

This report does not attempt to identify or address                    in river basins worldwide. The report results are
risks to water quality associated with the develop-                    available online (
ment of shale resources. Nor does it assess the                        maps/water-for-shale), providing open access to
performance of the oil and gas industry in manag-                      the underlying information and enabling updates as
ing water. Instead, it aims to share information                       new data are made available.
that can help increase the dialog among water
users from industry, government, and civil society

                                                                      Global Shale Gas Development: Water Availability and Business Risks       3
GLOBAL SHALE GAS DEVELOPMENT - Water Availability and Business Risks WRI.ORG
Figure ES1 |         L ocation of World’s Shale Plays, Volume of Technically Recoverable Shale Gas
                             in the 20 Countries with the Largest Resources, and the Level of Baseline Water Stress



                                  Country name

                   Average Baseline Water Stress Level

              Technically recoverable shale gas
              resources (trillion cubic meters)


                Low to medium
                Medium to high

                Extremely high

                Arid & low water use

                    SHALE BASIN

1. Colored polygons are areas that have been identified as shale plays: shale deposits that are viable for commercial production.
2. Dark grey polygons are shale basins. While shale plays fall within basins, other shale resources within basins may not be commercially viable.
3. Circle size denotes the country’s total technically recoverable shale gas resources (trillion cubic meters).
4. Circle color denotes the area-weighted average of baseline water stress levels over all shale plays within a country. If more than half of the country’s shale play area is in
    arid and low water use regions, the circle is colored in light grey.

Sources: Location of world’s shale basins and plays from West Virginia University and The National Energy Technology Laboratory. Estimates of total technically recoverable
shale gas resources from the U.S. Energy Information Administration. Estimates of baseline water stress from WRI’s Aqueduct Water Risk Atlas.

                                                                                              Global Shale Gas Development: Water Availability and Business Risks                    5
Key findings                                                                            Furthermore, 386 million people live on the land
                                                                                               over these shale plays, and in 40 percent of the
       Shale resources are unevenly distributed worldwide
                                                                                               shale plays, irrigated agriculture is the largest water
       and, for the most part, not located where freshwater
                                                                                               user. Thus drilling and hydraulic fracturing often
       is abundant. For example, China, Mexico (Figure
                                                                                               compete with other demands for freshwater, which
       ES2), and South Africa have some of the largest
                                                                                               can result in conflicts with other water users. This
       technically recoverable shale gas resources (based
                                                                                               is particularly true in areas of high baseline water
       on estimates from the U.S. Energy Information
                                                                                               stress, where over 40 percent of the available water
       Administration), but face high to extremely high
                                                                                               supplies are already being withdrawn for agricul-
       water stress where the shale is located.
                                                                                               tural, municipal, or industrial purposes.
       This report reveals that lack of water availability
                                                                                               The 20 countries with the largest shale gas or tight
       could curtail shale development in many places
                                                                                               oil resources that are recoverable using currently
       around the world:
                                                                                               available technology are shown in Table ES2.

       ▪▪     38 percent of shale resources are in areas that
              are either arid or under high to extremely high                                  ▪▪     Eight of the top 20 countries with the largest
                                                                                                      shale gas resources2 face arid conditions or high
              levels of water stress;
                                                                                                      to extremely high baseline water stress where the

       ▪▪     19 percent are in areas of high or extremely
              high seasonal variability; and
                                                                                                      shale resources are located; this includes China,
                                                                                                      Algeria, Mexico, South Africa, Libya, Pakistan,
                                                                                                      Egypt, and India.

       ▪▪     15 percent are in locations exposed to high or
              extremely high drought severity.

       Figure ES2 |        Mexico’s Shale Plays Often Overlap with Areas with High Baseline Water Stress

                                                                                                              11%                                   Low
                                                                                                                                 27%                Low to medium
                                                                                                                                                    Medium to high
                                                                                                   31%           STRESS
                                                                                                                                      4%            Extremely high
                                                                                                                                  8%                Arid & low water use
                                                                                                                      19%                            Shale play

       Sources: Location of shale plays from West Virginia University and The National Energy Technology Laboratory. Estimates of baseline water stress from WRI’s Aqueduct
       Water Risk Atlas.

Table ES2 |         Average Exposure to Water Stress across Shale Plays

RECOVERABLE SHALE GAS RESOURCES                                                           RECOVERABLE TIGHT OIL RESOURCES

                                             AVERAGE EXPOSURE TO                                                                       AVERAGE EXPOSURE TO
   RANKa           COUNTRY                   WATER STRESS OVER                               RANKa            COUNTRY                  WATER STRESS OVER
                                             SHALE PLAY AREA                                                                           SHALE PLAY AREA

       1           China                     High                                                1            Russian                  Low
       2           Argentina                 Low to Medium
                                                                                                 2            United States            Medium to High
       3           Algeria                   Arid & Low Water Use
                                                                                                 3            China                    High
       4           Canada                    Low to Medium
                                                                                                 4            Argentina                Low to Medium
       5           United States             Medium to High
                                                                                                 5            Libya                    Arid & Low Water Use
       6           Mexico                    High
                                                                                                 6            Australia                Low
       7           Australia                 Low
                                                                                                 7            Venezuela, RB            Low
       8           South Africa              High
                                                                                                 8            Mexico                   High
       9           Russian                   Low
                   Federation                                                                    9            Pakistan                 Extremely High

      10           Brazil                    Low                                                 10           Canada                   Low to Medium

      11           Venezuela                 Low                                                 11           Indonesia                Low

      12           Poland                    Low to Medium                                       12           Colombia                 Low

      13           France                    Low to Medium                                       13           Algeria                  Arid & Low Water Use

      14           Ukraine                   Low to Medium                                       14           Brazil                   Low

      15           Libya                     Arid & Low Water Use                                15           Turkey                   Medium to High

      16           Pakistan                  Extremely High                                      16           Egypt, Arab Rep.         Arid & Low Water Use

      17           Egypt, Arab Rep.          Arid & Low Water Use                                17           India                    High

      18           India                     High                                                18           Paraguay                 Medium to High

      19           Paraguay                  Medium to High                                      19           Mongolia                 Extremely High

      20           Colombia                  Low                                                 20           Poland                   Low to Medium

a. Based on size of estimated shale gas technically recoverable resources                 a. Based on size of estimated tight oil technically recoverable resources

Sources: Estimates of total technically recoverable shale gas and tight oil resources from the U.S. Energy Information Administration. Estimates of baseline water stress from
WRI’s Aqueduct Water Risk Atlas.

                                                                                           Global Shale Gas Development: Water Availability and Business Risks                   7
▪▪     Eight of the top 20 countries with the largest
              tight oil resources3 face arid conditions or high
                                                                  Based on the report’s analysis, WRI offers a set of
              to extremely high baseline water stress where
                                                                  practical recommendations for how governments,
              the shale resources are located; this includes
                                                                  businesses, and civil society can continue to evalu-
              China, Libya, Mexico, Pakistan, Algeria, Egypt,
                                                                  ate and sustainably manage freshwater availability
              India, and Mongolia.
                                                                  if shale resources are developed.
       Hydrological conditions vary spatially and seasonally
                                                                  1. C
                                                                      onduct water risk assessments to
       across shale plays, with variation among plays, within
                                                                     understand local water availability and
       plays, and throughout the year. This variation makes
                                                                     reduce business risk.
       companies’ ability to meet the freshwater demands
       for hydraulic fracturing and drilling highly unpredict-       1.1. C
                                                                           ompanies can evaluate water-related
       able, and estimates based on previous experience                   risks. Using a combination of publicly avail-
       not always accurate in new shale formations. This                  able global and asset-level tools, companies
       high level of uncertainty can lead to business risks for           should identify water-related business risks
       companies exploring new areas for development. Fur-                and prioritize areas to engage with regula-
       thermore, public concern over increased competition                tors, communities, and industry to increase
       and impacts on freshwater availability can threaten                water security.
       a company’s social license to operate and lead to
       changes in government regulations that could impact           1.2. G
                                                                           overnments can increase investments in
       both short- and long-term investments.                             collecting and monitoring water supply
                                                                          and demand information. Robust baseline
       WRI’s findings indicate that companies developing                  information and estimates of future water
       shale resources internationally are likely to face                 supply and demand and environmental
       serious challenges to accessing freshwater in many                 conditions can help build a strong, shared
       parts of the world. These challenges highlight a                   knowledge base to inform the development
       strong business case for strategic company engage-                 of effective water policies and science-based
       ment in sustainable water management at local                      targets and goals.
       and regional levels. They also point to a need for
       companies to work with governments and other
       sectors to minimize environmental impacts and
       water resources depletion.

2. I ncrease transparency and engage with
    local regulators, communities, and
    industry to minimize uncertainty.

  2.1. C
        ompanies can increase corporate water
       disclosure. By disclosing and communicating
       their water use and management approach,
       companies can build trust with financial and
       river basin stakeholders as they investigate
       water risks and opportunities. Ongoing
       disclosure will reduce reputational risks.

  2.2. G
        overnments and companies can engage
       with local and regional industry, agricul-
       ture, and communities. Companies should
       closely collaborate with local government,
       industry, NGOs, and civil society to under-
       stand the hydrological conditions and
       regulatory frameworks within the river
       basin. This information allows for more
       accurate estimates of the cost, technology,
       and processes required to access water for
       shale development without displacing other
       users or degrading the environment.

3. E
    nsure adequate water governance to               4. M
                                                          inimize freshwater use and engage in
   guarantee water security and reduce                   corporate water stewardship to reduce
   regulatory and reputational risks.                    impacts on water availability.

  3.1. C
        ompanies can engage in public water              4.1. C
                                                                ompanies can minimize freshwater
       policy. Adequate water governance and                   use. Using publicly available guidelines,
       environmental protection standards,                     companies can evaluate their potential for
       coupled with predictable implementation                 using non-freshwater sources and build a
       and effective enforcement, can minimize                 business case for investing in technology to
       environmental degradation and ensure                    recycle or reuse water, use brackish water,
       fair water allocation and pricing. A stable             or otherwise significantly reduce freshwater
       regulatory environment allows companies                 withdrawals.
       and investors to evaluate long-term oppor-
       tunities and minimize business risks.              4.2. C
                                                                ompanies can develop a water strategy
                                                               and engage in corporate water steward-
  3.2. G
        overnments and companies, through                     ship. Companies should embed water
       collective action, can develop source water             management at the core of their business
       protection and management plans. Gov-                   strategy to minimize exposure to risks and
       ernments and businesses in the early stages             ensure long-term water availability for
       of developing shale resources have a unique             other users, the environment, and their
       opportunity to work collectively with key               own operations. Corporate water steward-
       river basin stakeholders to develop source              ship involves a progression of increasing
       water protection and management plans                   improvements in water use and impact
       that help reduce business risks; promote                reductions across internal company opera-
       a shared water sourcing and recycling                   tions and the rest of the value chain.4
       infrastructure; and improve the sustainable
       management of watersheds and aquifers.

                                                      Global Shale Gas Development: Water Availability and Business Risks   9
Relatively little has been published on how shale development
impacts water availability in North America, and even less
worldwide. WRI fills this gap with new information describing where
in the world freshwater availability is most threatened and may limit
extraction of shale resources, should they be developed.

                                  Global Shale Gas Development: Water Availability and Business Risks   11
economic growth and reduce emissions from other
                                                                 conventional energy sources. Compared with coal,
                                                                 natural gas results in less carbon dioxide, nitrogen
                                                                 oxides, sulfur dioxide, particulates, and mercury
                                                                 per unit of energy produced.9 With effective poli-
                                                                 cies and standards in place, natural gas could help
                                                                 displace coal while complementing lower-carbon
                                                                 and renewable energy sources.10

                                                                 It is not sufficient to understand the potential
                                                                 benefits of shale resources relative to other energy
                                                                 sources; it is also necessary to know if the shale
                                                                 resources can actually be extracted. This depends
                                                                 on the economic viability of the resources, that is,
                                                                 the cost and feasibility of extraction, as well as on
                                                                 the onsite environmental and social considerations.
                                                                 These considerations are complex. For shale gas and
                                                                 tight oil to be extracted successfully, governments,
                                                                 companies, and investors must clear a range of
                                                                 economic, technical, environmental, legal, and social
                                                                 hurdles. Poor management of these challenges will,
                                                                 without doubt, impede development, undermine
                                                                 investments, and degrade natural capital.

                                                                 Much has been written about the key environmen-
        Rapid development of shale resources through             tal considerations and associated risks of shale
        hydraulic fracturing and horizontal drilling is          development, particularly in the United Sates.11
        significantly increasing the contribution of natural     All environmental considerations have a strong
        gas, natural gas liquids, and oil to the global energy   social component, since natural resources are the
        supply mix. Continued growth could transform the         foundation of economic opportunity and human
        global energy market.5 While profitable production       wellbeing. A recent U.S. study based on informa-
        has yet to spread outside the United States and          tion collected from experts in academia, industry,
        Canada, governments, investors, and companies            government, and nongovernmental organizations
        have begun to explore the commercial potential of        (NGOs) identified the 15 environmental impacts
        shale resources around the world. China and Argen-       from shale development most frequently identified
        tina recently embarked on joint-venture projects         and agreed upon as priorities for further regulatory
        with multinational corporations, and Mexico lifted       or voluntary action (Table 1).12 Many are not unique
        the government’s 75-year-old monopoly on oil and         to shale development, particularly those that take
        gas production, opening some of the world’s largest      place during site preparation or drilling activities,
        shale formations for development.6                       thus countries with mature hydrocarbon industries
                                                                 may already have extensive corporate and govern-
        The U.S. Energy Information Administration (EIA)         ment policies to help mitigate them.
        estimates that known shale gas deposits worldwide
        add 47 percent to the global technically recoverable     Of the 15 impacts identified, 12 relate to surface or
        natural gas resources and that underground stores        groundwater resources. This is because the develop-
        of tight oil add 11 percent to the world’s technically   ment of shale resources uses water so extensively,
        recoverable oil.7 In 2012, shale resources consti-       particularly during hydraulic fracturing (Figure
        tuted 40 percent of U.S. natural gas production and      1), and because poor drilling practices, including
        29 percent of U.S. crude oil production.8 If devel-      wastewater management and disposal, can degrade
        oped responsibly, this large, abundant, and newly        water quality. However, 10 of the identified impacts
        recoverable resource has the potential to catalyze       are linked to concerns over water quality, compared

Table 1 |     E nvironmental Impacts from Shale Gas Development Seen as Priorities by Government,
              Industry, Academia, and NGO Experts

                                           ACTIVITIES                                      BURDENS                                        IMPACTS
     Development                                                               Burdens that could be created
        Stage                                                                                                                 Aspects of the environment
                               Activities associated with the                    by a development activity
                                                                                                                             that could be affected by the
                                development of shale gas                       and that would have potential
                                                                                                                            shale gas development process
                                                                              impacts that people care about

                                                                                       Storm water flows                            Surface water quality
                                 Land clearing and infrastructure
   Site preparation
                                                                                     Habitat fragmentation                            Habitat disruption

                                        Venting of methane                                   Methane                                      Air quality

                                      Casing and cementing                                   Methane                                 Groundwater quality

                                         Casing accidents                                    Methane                                 Groundwater quality

                                                                                    Drilling fluids/cuttings
                                       Cementing accidents                             Fracturing fluids                              Groundwater quality
                                                                                 Flowback and produced water

                                                                                                                                  Surface water availability
                                     Use of surface water and
                                                                                    Freshwater withdrawals
                                                                                                                                  Groundwater availability
    Fracturing and
                                    Storage of fracturing fluids                        Fracturing fluids                           Surface water quality

                                        Venting of methane                                   Methane                                      Air quality

                                                                                                                                    Surface water quality
                                                                                 Flowback and produced water
                                     On-site pit/pond storage                                                                        Groundwater quality
      disposal of
                                                                                        Fracturing fluids                           Surface water quality
   fracturing fluids
     and flowback
                               Treatment by municipal wastewater
                                                                                 Flowback and produced water                        Surface water quality
                                        treatment plants
                               Treatment by industrial wastewater
                                                                                 Flowback and produced water                        Surface water quality
                                       treatment plants

Source: Alan J Krupnick, Managing the Risks of Shale Gas: Key Findings and Further Research (Resources for the Future, 2013),

                                                                                        Global Shale Gas Development: Water Availability and Business Risks               13
with only 2 regarding water availability. This might      The results also demonstrate the application of
        explain why relatively little has been published on       WRI’s Aqueduct Water Risk Atlas as a robust
        how shale development impacts water availability          decision-support tool to evaluate the water-energy
        in North America,13 and even less worldwide.14            nexus at a global scale and increase public aware-
                                                                  ness around water-related business risks.
        To fill this gap, the World Resources Institute
        (WRI) used data from the Aqueduct Water Risk              This report is not intended to assess the perfor-
        Atlas, West Virginia University, the National             mance of the oil and gas industry in managing
        Energy Technology Laboratory, and other sources           water, but rather to demonstrate the usefulness of
        to identify where freshwater availability might           global tools like the Aqueduct Water Risk Atlas as
        be a limiting factor to the development of shale          a starting point to promote increased dialog among
        resources. In this report, WRI provides comprehen-        water users across industry, government, and civil
        sive color-coded maps that:                               society in river basins around the world. The results

                                                                  of this report are published on an interactive online
               Identify locations most in need of govern-         platform (
               ment oversight and robust corporate policies       water-for-shale) that provides open access to the
               to ensure freshwater availability for industry,    data and results, and enables frequent updates of
               communities, agriculture, and the environment      the information as new data are made available.
               over time, if shale resources are developed, and

        ▪▪     Inform companies developing shale resources
               of potential business risks associated with
               freshwater availability, and build the case for
               increasing water stewardship and early source
               water assessment in the oil and gas sector.

Figure 1 |        The Hydraulic Fracturing Water Cycle

              1                           2                               3                          4                                             5
      Water Aquisition             Chemical Mixing                  Well Injection             Flowback and                          Wastewater Treatment
                                                                                              Produced Water                          and Waste Disposal

                                                                                                                   Natural gas flows from fissures into well

Source: Adapted from U.S. Environmental Protection Agency, “The Hydraulic Fracturing Water Cycle,” EPA’s Study of Hydraulic Fracturing and Its Potential Impact on
Drinking Water Resources, March 16, 2014,

                                                                                        Global Shale Gas Development: Water Availability and Business Risks          15
Large water withdrawals during the drilling and hydraulic fracturing
stages are necessary to extract shale resources. These withdrawals
are concentrated over shale gas and tight oil production areas,
making source water availability and the associated risks a critical
consideration when evaluating the potential for shale development.

                                  Global Shale Gas Development: Water Availability and Business Risks   17
BOX 1 | SHALE RESOURCES TERMINOLOGY                                             an even lower permeability than tight gas or coal
                                                                                     bed methane reservoirs.16 Thus gas and fluid pass
                                                                                     through shale less easily than through brick, con-
     ▪▪ Natural gas liquids (NGLs): naturally occurring
        hydrocarbons found in natural gas or associated
                                                                                     crete, or even granite.17 Because of its extremely low
                                                                                     permeability, shale must be cracked apart for oil and
          with crude oil that are considered a byproduct in the
          oil and gas industry and increasingly being targeted                       gas to flow up to the surface at a profitable rate; this
          for extraction.                                                            is achieved by hydraulic fracturing.

     ▪▪ Shale  basin: large shale formation defined by
        similar geologic characteristics.
                                                                                     Extraction of Shale Resources
     ▪▪ Shale  gas: natural gas deposits found in shale
        reservoirs.                                                                  Shale can, in places, be hydraulically fractured to
                                                                                     produce large quantities of natural gas, NGLs, and
     ▪▪ Shale  play: the prospective areas of a shale basin
        where gas and oil could potentially be commercially
                                                                                     tight oil. Hydraulic fracturing entails pumping fluid
                                                                                     composed of water, proppants, and chemicals into
                                                                                     the ground at very high pressure. The pressurized
     ▪▪ Shale  resource: hydrocarbon resources found in
        shale plays, such as natural gas, natural gas liquids,
                                                                                     water and chemicals create and enlarge cracks in
                                                                                     the shale formation, which increases its permeabil-
          and tight oil.                                                             ity by 100- to 1,000-fold, allowing the hydrocarbons

     ▪▪ Tight oil: oil trapped in fine-grained sedimentary
        rocks with extremely low permeability, such as
                                                                                     to flow more easily to the wellbore.18 Depending on
                                                                                     many factors, a well might remain productive for 5
          shale, sandstone or carbonate.                                             to 40 years.

     Sources: E.D. Williams and J.E. Simmons, Water in the Energy Industry.
                                                                                     After the hydraulic fracturing treatment, the water
     An Introduction (United Kingdom: BP International Ltd, 2013), http://www.       pressure in the well is reduced to allow the fracturing
     handbook-131018.pdf. L. Biewick, G. Gunther, and C. Skinner, “USGS National
                                                                                     fluid to flow back out of the well followed by the oil
     Oil and Gas Assessment Online (NOGA Online) Using ArcIMS” (Denver,              and gas. As the fluid flows back to the surface, a pro-
     Colorado: U.S. Geological Survey, n.d.),   cess commonly referred to as “flowback,” the sand
                                                                                     and other proppants pumped into the formation are
                                                                                     left behind—like doorstops—to prop open the new
                                                                                     and enlarged cracks. As flowback continues, the
                                                                                     composition of the fluid carries higher and higher
                                                                                     proportions of hydrocarbons. Within the first few
                                                                                     weeks of flowback, some or most of the fracturing
                                                                                     fluid returns to the surface as wastewater. In North
                                                                                     America, estimates of the volume of flowback vary
                                                                                     between 10 to 75 percent of the fracturing fluid origi-
                Shale is a fine-grained, fissile sedimentary rock                    nally injected.19 Because of its chemical content, this
                composed primarily of clay and silt-sized particles.                 wastewater is recycled and treated for reuse, placed
                It is the source rock, reservoir, and seal for shale                 into disposal wells, or treated and discharged into
                gas and some tight oil. The shale hydrocarbons                       surface waters.20 If not managed properly, flowback
                considered in this study, referred to as “shale                      water and other wastewater from hydraulic fractur-
                resources,” include: shale gas, natural gas liquids                  ing operations can cause significant degradation
                (NGLs), and tight oil (Box 1).                                       to surface water and groundwater that could pose
                                                                                     serious risks to the ecosystems and communities that
                Large shale formations defined by similar geologic                   depend on them.21
                characteristics are often referred to as “shale basins.”
                The prospective areas of the shale basin where gas
                and oil could potentially be commercially extracted
                are commonly referred to as “shale plays.” Shale
                has extremely low permeability, equivalent to about
                1 percent of an average conventional reservoir,15

Water Requirements
   The life cycle of shale energy requires water during its
   preproduction, production, and use stages,22 as well
   as for refining oil to a grade fit for consumption.23 The
   largest water withdrawals for shale resource extrac-
   tion occur during the drilling and hydraulic fractur-
   ing stages. In 2005, water withdrawals for mining
   (which includes oil and gas extraction) represented
   only 1 percent of U. S. water withdrawals (Figure 2).24
   In 2010, water withdrawals for hydraulic fracturing
   represented only 0.5 percent of the withdrawals in
   Texas.25 However, water withdrawals for drilling and
   hydraulic fracturing are unevenly distributed and con-
   centrated over areas where shale resources and tight
   gas are produced, potentially representing a much
   higher fraction of the water withdrawn in the drilling
   area.26 Additionally, much of the water required for

   Figure 2 |                              P
                                            ercentage of U.S Water Withdrawals
                                           by Category, 2005


                                                                                                                                  hydraulic fracturing is consumptive, thus it does not
                                                                                                                                  all return to the surface or groundwater from which it
                                                                                                                                  was abstracted.

                                                                                                                                  Based on experience in the United States, drilling
Withdrawal (percent)

                                                                                                                                  a single well can require between 0.2 million and
                                                                                                                                  2.5 million liters of water and hydraulic fracturing
                                                                                                                                  a well can require between 7 million and 23 mil-
                                                                                                                                  lion liters of water,27 25 percent to 90 percent of
                                                                                                                                  which might be consumptive use.28 The wide range
                                                                                                                                  of values for consumptive water use indicates the
                                                                                                                                  high levels of uncertainty about possible impacts
                                                                                                                                  of hydraulic fracturing on freshwater availability.
                                                                                                                                  The water required by a single well can be roughly
                                                                         4                                                        equal to the water consumed by New York City in 7
                                                                                       2                                          minutes, or by a 1,000-megawatt coal-fired power
                                                                                                   1         1        0.5
                                                                                                                                  plant in 12 hours.29 Drilling and fracturing multiple


                                                       Public supply






                                                                                                                                  wells, multiple times, in the same area, can rapidly
                                                                                                                                  escalate local water consumption. Furthermore, in
                                                                                                                                  many areas of the world, the location of shale plays
                                                                                                                                  coincides with areas of low availability and high
                                                                                                                                  demand for water (Box 2), making access to local
                       Source: J.F. Kenny et al., “Estimated Use of Water in the United States in                                 water resources a challenge for companies extract-
                       2005,” U.S. Geological Survey Circular 1344, (2009),                                 ing shale resources.

                                                                                                                                  Global Shale Gas Development: Water Availability and Business Risks   19
BOX 2 | WATER FOR U.S. HYDRAULIC                                                 acteristics vary based on the formation geology. The
     FRACTURING OPERATIONS IS A SMALL                                                 shale play’s depth, thickness, and porosity can also
     PERCENTAGE OF TOTAL USE, BUT CAN BE                                              influence water requirements.30
                                                                                      Many companies use freshwater for drilling and
                                                                                      fracturing, though brackish and recycled water
     In the United States, water demands for hydraulic                                offer significant opportunities to reduce freshwater
     fracturing and drilling activities account for only one                          demands.31 Information on the proportion of brack-
     tenth of 1 percent of all U.S. water withdrawals. This                           ish, recycled, or reused water used as a substitute
     demand, however, is concentrated around active shale
     plays,a 26 percent of which are in areas with high and                           for freshwater in the United States is scarce.32 Avail-
     extremely high water stress. Thus, although the national                         able data indicates that in 2011 brackish water use
     percentage of water used for fracturing may be low                               by the oil and gas industry in Texas ranged between
     relative to other water demands, the water requirements                          0 and 80 percent, and recycled water between 0
     for shale resources extraction in specific locations                             and 20 percent of the total water demand, depend-
     can be significant and in competition with other
                                                                                      ing on the location.33 Additionally, although nearly
     water uses. For example, in Johnson County, Texas,
     water withdrawals for shale gas development in 2008                              all fracturing treatments use water, alternatives
     were responsible for almost one third of the county’s                            exist including liquefied petroleum gas and carbon
     freshwater use.b In three contiguous counties in Texas’s                         dioxide fracture treatments.
     Eagle Ford shale basin, freshwater demand of hydraulic
     fracturing is expected to grow by 2020 to exceed the                             One of the limitations to recycling and reusing
     2008 amount of all other water users combined.c
                                                                                      water is that the amount of flowback returned to the
     These examples indicate that shale gas development                               surface varies between and within plays. However,
     in semiarid regions, such as the southwestern United                             new projects are underway to support increased
     States, could have a large impact on local surface and                           recycling and reuse to reduce freshwater withdraw-
     groundwater availability and potentially displace other                          als and consumption by the oil and gas sector.34
     users if the increased demand is not adequately managed.
                                                                                      Aside from drilling and hydraulic fracturing
     Sources:                                                                         (which can occur multiple times in the same well),
     a. U.S. Environmental Protection Agency, “Draft Plan to Study the Potential
         Impacts of Hydraulic Fracturing on Drinking Water Resources,” (Washington,
                                                                                      very little water is needed to prepare the site or
         DC: U.S. Environmental Protection Agency, February 7, 2011).                 maintain the machinery for the well’s 5- to 40-year
     b. Jean-Philippe Nicot and Bridget R. Scanlon, “Water Use for Shale-Gas
                                                                                      estimated lifespan.35
         Production in Texas, U.S.,” Environmental Science & Technology 46, no. 6
         (March 2012): 3580–86, doi:10.1021/es204602t.
     c. Ibid.

                                                                                      Freshwater Availability Risks
                                                                                      Source water availability is a critical consideration
                                                                                      when evaluating the potential for shale develop-
                                                                                      ment. Shale resources are tied to geographic loca-
                                                                                      tions, creating very high location-specific demands
                                                                                      for water that must be met in order to successfully
                                                                                      extract the resource. Yet, fresh and brackish water
                The amount of water required to complete a well                       are natural resources that must be shared among all
                varies from well to well and play to play, making                     users, and that play a critical role in sustaining local
                estimates of water demands for shale develop-                         ecosystems and socioeconomic development in the
                ment uncertain for most unexplored plays around                       areas where shale development takes place.
                the world. The variation in water requirements
                depends on the geology and the well characteristics.                  Limited or unpredictable water availability can
                For example, the number of horizontal segments                        jeopardize a project’s financial viability. In areas
                hydraulically fractured, as well as the production                    with high demand relative to the available supply,
                type, depth and length of the well, determine the                     added water withdrawals for drilling and hydraulic
                amount of water required. In turn, these well char-                   fracturing operations can deplete water resources,
                                                                                      degrade the environment, and displace other users.

Table 2 |       Potential Business Risks Associated with Water Availability

   DESCRIPTION                               BUSINESS IMPACT                          EXAMPLES


   Transportation: Water                     If not accounted for at the              United States: Antero Resources Inc., backed by New York private
   transportation costs, which               initial stages of the project,           equity firms, plans to spend more than half a billion dollars on
   can dwarf the purchase price              additional costs to transport            an 80-mile pipeline that will transport water from the Ohio River
   of water, are most often the              water can significantly threaten         to extract shale gas in West Virginia and Ohio.a The pipeline will
   dominant financial risk.                  profitability.                           reduce water costs, mostly from trucking, by two-thirds, or around
                                                                                      US$600,000 per well.b This implies that Antero may be spending
                                                                                      around US$900,000 per well for water.

   Pricing: High water demand                Increased operating cost to              United States: During the 2011 drought, oil and gas companies in
   and diminishing supplies                  access alternative sources of            parts of Colorado were paying as much as US$1,000 to US$2,000
   drive up the price of water.              water.c                                  for the same amount of treated water from city pipes that farmers
                                                                                      would pay US$30 for on an average year or US$100 when water
                                                                                      was scarce.d


   Social and environmental                  High water stress and other              United Kingdom: Protests in the village of Balcombe concerning
   concerns: Real or perceived               environmental concerns can               a host of hydraulic-fracturing-related environmental risks have
   concerns over freshwater                  exacerbate public opposition             caused the energy firm Cuadrilla to delay project development for
   availability can threaten a               to hydraulic fracturing,e                months.f
   company’s social license to               causing a company to lose its
   operate.                                  social license to operate and/           South Africa: Shell faced significant social opposition to its plans
                                             or undergo significant project           to seek shale gas in South Africa’s semidesert Karoo region. Social
                                             delays and asset downtime.               concerns over water availability resulted in projected delays and a
                                                                                      temporary government ban on hydraulic fracturing.


   Regulatory uncertainty:                   Concerns over water supply               United States: Severe droughts in 2011 caused restrictions and
   Concerns over environmental               availability can be one of many          bans on the use of water for hydraulic fracturing in the Barnett and
   degradation, including the                reasons that national and                Permian basins.h
   depletion of water, can cause             subnational governments ban or
   governments to limit or even              place a moratorium on hydraulic          Bulgaria: Environmental concerns led Bulgaria to ban hydraulic
   prohibit shale development.               fracturing,g leading companies           fracturing and revoke a shale gas permit granted to Chevron.
                                             to lose their legal license
                                             to operate, and/or undergo               France: France banned hydraulic fracturing and canceled
                                             significant project delays and           exploration licenses held by companies including Total SA and the
                                             asset downtime.                          U.S. firm Schuepbach Energy.i

a. Russell Gold, “Energy Firm Makes Costly Fracking Bet - on Water,” Wall Street     f. BBC, “Balcombe Protests: Fracking Row Village Sees Fresh Plan,” BBC
    Journal, August 2013, Online edition, sec. Business,           News Sussex, September 4, 2013,
    article/SB10001424127887323420604578652594214383364.html.                             sussex-23944344.
b. Ibid.                                                                              g. Matt Steinglass, “Fracking: Netherlands Moves Closer to Shale Gas
c. Melissa Stark et al., Water and Shale Gas Development: Leveraging the US               Exploitation,” Financial Times, August 2013,
    Experience in New Shale Developments (Accenture, 2012), http://www.                    c20b1e24-0e66-11e3-bfc8-00144feabdc0.html#axzz2eQg9CIST.              h. Mike Lee, “Parched Texans Impose Water-Use Limits for Fracking Gas Wells,”
    Gas-Development.pdf.                                                                   Bloomberg Businessweek, September 2011.
d. Jack Healy, “For Farms in the West, Oil Wells Are Thirsty Rivals,” The New York   i. Tara Patel and Gregory Viscusi, “France’s Fracking Ban ‘Absolute’ After Court
    Times, September 2012,             Upholds Law,” Bloomberg News, October 11, 2013,
    water-in-colorado-with-rise-in-fracking.html?pagewanted=all&_r=2&.                    news/2013-10-11/fracking-ban-upheld-by-french-court-as-constitutional.html.
e. Alec Tang and Kristina Ringwood, “Water Sustainability Risk Assessments:
    Lessons from Water Sensitive Industries,” in Offshore Technology Conference
    (Houston, Texas, USA: Offshore Technology Conference, 2013), 1–6,

                                                                                      Global Shale Gas Development: Water Availability and Business Risks                 21
These externalities can translate into business risks
        for companies developing shale resources, includ-                   Source water
        ing: financial risks, reputational risks, and regula-
        tory risks (Table 2).                                     availability is a critical
        These risks can translate into business disruptions
                                                                     consideration when
        and impact company profitability, as well as short-
        and long-term investments in shale development,
                                                                evaluating the potential
        particularly in arid regions such as those in China’s
        Tarim basin and South Africa’s Karoo basin.
                                                                 for shale development.
        The technology exists to procure, treat, and
                                                                    Shale resources are
        transport water for nearly any shale development
        operation. The question is: Has the cost of the tech-
                                                                      tied to geographic
        nology, as well as the social, environmental, and
        regulatory implications, been adequately addressed
                                                                locations, creating very
        in the early stages of the investment and decision-       high location-specific
        making process? Governments and companies need
        to answer this question, in part, by assessing source    demands for water that
        water availability and the associated risks early on.
        Furthermore, adequate water management policies,        must be met in order to
        plans, and strategies must be in place to allow for
        long-term sustainable use of local water resources           successfully extract
        by all sectors, as well as by the environment.
                                                                             the resource.

Global Shale Gas Development: Water Availability and Business Risks   23
Companies selecting freshwater to supply shale development
projects need to evaluate and understand the availability of local
and regional freshwater sources. In this report WRI uses seven
indicators to assess freshwater availability and business risks
across major shale plays worldwide. The results reveal areas
with potential challenges to accessing water, and highlight the
associated financial, reputational, and regulatory risks to companies
developing shale resources.

                                  Global Shale Gas Development: Water Availability and Business Risks   25
BOX 3 | HOW TO IDENTIFY AND ASSESS                                           freshwater to supply their projects need to evaluate
     A WATER SOURCE FOR OIL AND GAS                                               and understand the availability of local and regional
     OPERATIONS                                                                   freshwater. Companies with large portfolios of
                                                                                  assets, as well as investors, need location-specific,
                                                                                  credible, and comprehensive information that can
     The global oil and gas industry association for                              be compared across regions, countries, and basins,
     environmental and social issues (IPIECA) recommends
                                                                                  shared publicly, and understood by all stakeholders.
     six steps for companies to identify and assess a source
     of water for oil and gas operations:
                                                                                  This report offers a set of quantitative indicators and
     ▪▪   Step 1: Engage stakeholder and regulatory organiza-
                                                                                  maps to help stakeholders evaluate freshwater avail-
                                                                                  ability across major shale plays worldwide. The results
     ▪▪ Step  2: Understand current and future project water
                                                                                  reveal areas with potential challenges to accessing
                                                                                  freshwater, and the associated financial, reputational,

     ▪▪ Step 3: Identify water sources within the project area
                                                                                  and regulatory risks to companies developing those
                                                                                  shale resources. The results also highlight the areas
     ▪▪ Step  4: Evaluate the status of water quantity and quality
        in the area
                                                                                  most in need of effective water governance to ensure
                                                                                  sustainable management and distribution of water

     ▪▪ Step 5: Assess impacts, risks, and uncertainty                            resources to meet the needs of communities, the
                                                                                  environment, industry, and agriculture.
     ▪▪ Step 6: Select the water source
     Source: Adapted from IPIECA, Identifying and Assessing Water Sources         Methodology
     (London: IPIECA, 2014),
     assessing-water-sources.                                                     To create the maps showing areas of high shale
                                                                                  resource potential and low water availability, WRI
                                                                                  overlaid maps of the world’s major shale plays
                                                                                  identified at the time this report was written with
                                                                                  data for seven water-related indicators: baseline
                                                                                  water stress, seasonal variability, drought severity,
                                                                                  groundwater stress, dominant water user, popula-
                                                                                  tion density, and reserve depth interval. The results
                                                                                  provide a comprehensive visual resource and
             Companies that develop shale resources need to                       quantitative database to help evaluate the spatial
             access and handle large quantities of water, and thus                variation in water availability and the associated
             are likely to be significant users and managers of                   business risks across shale plays.
             water at the local and regional levels. As such, they
             must identify and select their potential water sources               The indicators and locations of shale plays were
             within the broader context of local or regional water                combined using geospatial tools. The resulting
             management considerations.36 IPIECA, the global oil                  information is displayed in maps and provides
             and gas industry association for environmental and                   coverage for each indicator, across each shale play,
             social issues, recommends that in identifying and                    allowing the results to be aggregated and shared
             assessing potential water sources (Box 3), operators                 at a play, country, region, or global level. In this
             work with river basin stakeholders to evaluate the                   report, all summary results are calculated by area.
             quantity and quality available for use, as well as the               For example, a result that shows 38 percent of shale
             associated impacts, risks, and uncertainties before                  resources are located in areas that are arid or under
             selecting their water sources.                                       high to extremely high levels of water stress means
                                                                                  that 38 percent of the global shale play area, not 38
             Regulatory frameworks, freshwater constraints, and                   percent of the global technically recoverable shale
             the economics of water treatment will determine                      resource volume, is under high or extremely high
             the extent to which brackish water and wastewater                    levels of water stress.
             are feasible substitutes for freshwater for hydraulic
             fracturing.37 In the meantime, companies selecting

This report summarizes the results at a global level,   tions by the U.S. Energy Information Administra-
as well as by shale play for 11 countries. Countries    tion, Journal of Petroleum Technology, China
were selected based on the size of their techni-        University of Geosciences, Oil and Gas Journal,
cally recoverable shale resources, according to the     national and subnational geological surveys, and
U.S. Energy Information Administration, current         other academic, industry, and governmental
exploratory and production activity, likelihood of      sources. The geo-database includes a number of
future development, and feedback from industry,         attributes for each shale formation, including the
academia, and NGO experts. Countries include            basin and play name, geologic age, depth interval,
Algeria, Argentina, Australia, Canada, China,           reservoir pressure, thermal maturity, oil and gas in
Mexico, Poland, Saudi Arabia, South Africa, United      place, and data source, among others. It is avail-
Kingdom, and the United States (Appendix A).            able online (
All results and underlying data are available for       unconventional-resources-atlas).
download from the project website (http://www. and will        The geo-database is not an all-inclusive collection
be updated as new data are available.                   of unconventional onshore formations, but rather a
                                                        collection of general information on the location of
                                                        shale basins and plays publicly available at the time
Geo-Database of Shale Basins and Plays                  of the analysis.

The West Virginia Geographic Information Sys-
tems Technical Center (WVGISTC) and West
Virginia University (WVU), in collaboration with        Water Availability
the National Energy Technology Laboratory and           and Business Risk Indicators
WRI, compiled a digital GIS geometry and attribute      Seven indicators are used in this assessment (Table
geo-database of major onshore shale formations          3). Five were obtained from WRI’s Aqueduct Water
targeted for unconventional development of gas and      Risk Atlas, a global database of publicly available
liquid hydrocarbon resources.38 The compilation         water risk indicators and maps. The Aqueduct
excludes offshore shale formations.                     Water Risk Atlas leverages publicly available data,
                                                        to provide robust and science-based information for
The geo-database consists of 228 shale basins and       decision makers. The data can be compared glob-
339 shale plays in the public domain in publica-        ally across political and hydrological boundaries.

                                                        Global Shale Gas Development: Water Availability and Business Risks   27
This global coverage enables users to consistently                             One indicator, population density, was obtained
        evaluate exposure to water-related risks across a                              from Columbia University and Centro Internacional
        portfolio of current or prospective assets, suppliers,                         de Agricultura Tropical. The seventh indicator,
        commodities, or investments. Because of this, the                              the depth interval of the shale formation, was
        Aqueduct Water Risk Atlas is not designed to char-                             obtained from WVGISTC. The depth of the shale
        acterize water risks at any particular location; many                          formation has an impact on water requirements
        of the local legal, social, and structural complexities                        because deeper formations require more water for
        associated with managing water are not included                                drilling.40 All indicators were selected based on
        in global models. Instead, the Aqueduct Water Risk                             their relevance for shale exploration and production
        Atlas helps provide the context necessary to under-                            and feedback from industry, academic, and NGO
        stand water-related risks at a portfolio-level, which,                         experts. Indicators make use of the most up-to-date
        combined with local information and a deep under-                              and high resolution global datasets available in the
        standing of a company’s management practices,                                  public domain. The definitions, calculations, data
        can help evaluate company risks. All indicators in                             sources, and scoring methodology are documented
        the Aqueduct Water Risk Atlas were developed and                               and publicly available for download from the cited
        published by WRI in 2013, in consultation with an                              sources and available on the project website.
        external advisory group of experts from industry,
        academia, government and NGOs.39

        Table 3 |    Indicators and Business Risks

          INDICATOR                                                        LEGEND                          BUSINESS RISKS

          Baseline water stress                                             Low (80%)
          Shiao, “Aqueduct Global Maps 2.0,” Working Paper,
          (World Resources Institute, Washington, DC, 2013),                Arid & low water use
          available at             No data

          Seasonal variability                                              Low (1.33)        additional transportation and storage,
          “Aqueduct Global Maps 2.0,” Working Paper
          (World Resources Institute, Washington, DC, 2013), available      Arid & low water use         and unanticipated changes in pricing or
          at                                      regulatory requirements.
                                                                            No data

          Drought severity                                                  Low (50)
          Multi-Model, Multi-Scenario, IPCC AR4 Simulations,”
          Climate Dynamics 31 (2008): 79–105; http://link.springer.         Arid & low water use
          com/article/10.1007/s00382-007-0340-z                             No data

Table 3 |    Indicators and Business Risks (cont.)

  INDICATOR                                                        LEGEND                             BUSINESS RISKS

  Groundwater stress                                                Low (20)             supplies are often particularly important
  Source: T. Gleeson, Y. Wada, M.F. Bierkens, and L.P. van
  Beek, “Water Balance of Global Aquifers Revealed by               Arid & low water use            in developing shale resources because
  Groundwater Footprint,” Nature 488, no. 7410 (2012):                                                of their close proximity to wells and the
                                                                    No data
  197–200, doi: 10.1038/nature11295.                                                                  potential for contamination.

  Dominant water user                                                                                 Understanding the major water user
  The sector (agricultural, municipal or industrial) with the                  Domestic               within a play area helps (a) determine
  largest annual water withdrawals.                                                                   the largest sector competitor for water,
  Source: F. Gassert, M. Landis, M. Luck, P. Reig, and T.                                             and (b) predict the type of conflicts that
  Shiao. “Aqueduct Global Maps 2.0.” Working Paper.                                                   may arise. For example, in some regions,
                                                                               Agricultural           agricultural water users have strong
  World Resources Institute, Washington DC., 2013),
  available at                                               traditional, political, and social influence.

  Population density                                                                                  Areas of high population density pose
  The average number of people per square kilometer.                                                  complex barriers to shale development;
  Source: CIESIN and CIAT, “Gridded Population of the              Population                         such as logistical, environmental, and
  World Version 3 (GPWv3): Population Count Grid,” Future          Density                  0.4       social challenges to accessing water.
  Estimates, Palisades, NY: NASA Socioeconomic Data and            (people/sqkm)                      High population density often indicates
  Applications Center (SEDAC), 2005, available at http://                                             high competition for water and significant                                                                        regulatory and reputational risks.

  Reserve depth interval                                                                              The range of depths of the prospective
  The range of depths (in meters) of the prospective shale area.                                      shale area indicates if more or
  The black line indicates the global average depth in meters.                                        less water will be required. Deeper
  Source: West Virginia University and The National                                                   formations generally require more
  Energy Technology Laboratory. “Atlas of Unconventional                                              water for drilling.
  Hydrocarbon Resources.” 2014, available at https://edx.                             5,029

                                                                             Global Shale Gas Development: Water Availability and Business Risks      29
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